Question 2
Which of the following is not a true statement about the goal of maximizing shareholder wealth?

a.It takes into account the timing of cash-flows.
b.It is a short-run point of view which takes risk into account.
c.It considers risk as a factor.
d.None of the above.

Question 3
The major difficulty in most insider-trading cases has been

a.that lenient judges have simply released the guilty individuals.
b.that insider trading, even though illegal, actually serves a beneficial economic and financial purpose.
c.that inside trades have not been legally well defined.
d.inside trades actually have a beneficial effect on the wealth of all stockholders.

Question 4
Which of the following is not a primary source of capital to the firm?

a.assets
b.common stock
c.preferred stock
d.bonds

Question 5
When a corporation uses the financial markets to raise new funds, the sale of securities is made in the

a.that the owner has limited liability.
b.that stock in the proprietorship can be easily transferred
c.that it is exempt from many tax rules that would otherwise apply when employees are hired by the firm.
d.low operating costs.

Question 7
How many of the following items are found on the balance sheet, rather than the income statement?